- A survey has revealed that many Ghanaians have reduced the volume of their mobile money transactions since the e-levy was implemented
- The IMANI study reveals that 83% of respondents say they have reduced the volume of their transactions by between 51% to 100%
- The survey also revealed that 9 in 10 respondents were strongly against the e-levy because they believe government to make money by cutting down on waste
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A survey by think tank IMANI Centre for Policy and Education has found that 83% or 8 in 10 Ghanaians have reduced their volume of mobile money transactions since the implementation of the e-levy on May 1, 2022.
Many of them said they have reduced the volume of their transaction by 51% to 100%.
The study conducted in collaboration with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) also suggests that many Ghanaians are likely to stay away from mobile money transactions for a long time.
“Our findings suggest that the official 24% attrition rate, which the government estimates for the first three to six months following the introduction of the e-levy, is likely to be much higher.
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“This finding implies that the forecasted GH¢4.5 billion (GH¢560 per month) e-levy revenue target for 2022 is unlikely to be attained given the strong consumer backlash and people finding alternative means of undertaking financial transactions,” report released on the survey on June 22, 2022, stated.
The IMANI survey also revealed that an overwhelming majority of respondents (85.9% or 9 in ten respondents) were strongly against or not in support of the e-levy.
“Opposition to the e-levy provided by respondents indicates that the government could take additional expenditure measures by cutting down on waste,” the study indicated.
A total of 1,677 respondents filled out close-ended questionnaires for the survey.
The e-levy was implemented amid strong public criticism in May. The tax regime charges 1.5% of the volume of every mobile money and electronic bank transaction above GH¢100.
Below is a summary of the key findings of the study
1. A majority (55.3%) of respondents indicated that they used their digital financial services account for personal purposes such as paying medical bills, school fees, ordering food, and sending money to family, among others. This is followed by business transactions (32.8%) such as payment for goods and services, and lastly, payment for government services (9.4%), such as payment of taxes to the Ghana Revenue Authority (GRA), passport, and Driver and Vehicle Licensing Authority (DVLA), among others. What is interesting to note here is that the ratio of personal use to the combined business transitions is almost 2:1 for the sample population.
2. Prior to the imposition of the e-levy, the respondents prioritised the convenience (46.5%) of digital financial services, followed by the security (27.5%) that such digital platforms offer and lastly, the fact that transfer costs (24.8%) were no more than GHS10 regardless of the amount being transferred. We, however, see a change in response in the post-e-levy implementation period: transfer cost is now ranked as the second important factor by respondents (36.73%) despite convenience (44.19%) still retaining the top spot, albeit dropping marginally.
3. An overwhelming majority of respondents (85.9% or 9 in ten respondents) indicated they were strongly against or somewhat not in support of the e-levy. Another 13% either strongly supported or somewhat supported the e-levy, while 1.1% remained undecided. The main reasons for such support were to allow the government to collect more revenues for development purposes (38.9%) and to include those in the informal sector of the economy in paying their fair share of taxes (widening the tax base; 54.2%). This view has also been shared in various official policy communications regarding the e-levy.
4. Opposition to the e-levy provided by respondents indicates that the government could take additional expenditure measures by cutting down on waste. For example, 32% of those not supporting the e-levy indicated that the government could cut down on wasteful expenditures such as Land Cruiser V8 cars, allowances, conferences, and travel. It is apparent here that many citizens (72.6%) feel that the government already collects enough taxes and should prudently manage the expenditure side of the equation.
5. About 83% or 8 in ten respondents indicated that their volume of transactions has changed since the implementation of the e-levy in May 2022. Of this number, about 47% indicated that they had reduced the number of mobile money transactions by about 51% to 100%. Our findings suggest that the official 24% attrition rate, which the government estimates for the first three to six months following the introduction of the e-levy, is likely to be much higher. This finding implies that the forecasted GHS4.5 billion (GHS560 per month) e-levy revenue target for 2022 is unlikely to be attained given the strong consumer backlash and people finding alternative means of undertaking financial transactions. A recent news report quoting the Director of Research and member of the Monetary Policy Committee at the Bank of Ghana indicates that Ghana realised GHS54 million from the e-levy in the first month of its implementation. However, they are unsure if it is to do with changes in consumer behaviour. Our survey indicates a strong demand elasticity or response to the use of digital financial services by the sample population.
6. Several respondents indicated they had found alternative means to avoid paying the e-levy. This included the following measures: carrying physical cash (43.8%), using the mainstream commercial banks (18.1%), and exploiting loopholes in the system by collaborating with mobile money vendors to allow cash out (20.7%), among others.
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